The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows:
| Year | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| Mileage | 3,100 | 4,050 | 3.400 | 3,800 | 3,700 |
a) Using a 2-year moving average, the forecast for year 6 = _______ miles (round your response to one decimal place).
b) If a 2-year moving average is used to make the forecast, the MAD based on this = _______ miles
c) The forecast for year 6 using a weighted 2-year moving average with weights of 0.35 and 0.65 (the weight of 0.65 is for the most recent period) =_______ (round your response to the nearest whole number).
The MAD for the forecast developed using a weighted 2-year moving average with weights of 0.35 and 0.65= _______ miles
d) Using exponential smoothing with α = 0.40 and the forecast for year 1 being 3.100, the forecast for year 6 = _______ miles
a) using a 2 year moving average method
F(6) = {Actual(4) + Actual(5)}/2
= (3800+3700)/2
= 3750
b) F(3) = (3100+4050)/2
= 3575
F(4) = (4050+3400)/2
= 3725
F(5) = (3400+3800)/2
= 3600
MAD(Mean Absolute Deviation) = Sum of absolute deviations/Number of periods
= (175 + 75 + 100)/3
= 116.7
c) using the weighted average method
F(3) = 0.65*Actual(2) + 0.35*Actual(1)
= 0.65*4050 + 0.35*3100
= 3718
F(4) = 0.65*3400 + 0.35*4050
= 3628
F(5) = 0.65*3800 + 0.35*3400
= 3660
F(6) = 0.65*3700 + 0.35*3800
= 3735
MAD(Mean Absolute Deviation) = (318 + 172 + 140)/3
= 210
d) F(2) = 0.4*Actual(1) + (1-0.4)*F(1)
= 0.4*3100 + 0.6*3100
= 3100
F(3) = 0.4*4050 + 0.6*3100
= 3480
F(4) = 0.4*3400 + 0.6*3480
= 3448
F(5) = 0.4*3800 + 0.6*3448
= 3589
F(6) = 0.4*3700 + 0.6*3589
= 3633
The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows: